Mandatory Financial Stability Assessments under the FSAP

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In 2010, the IMF Executive Board made financial stability assessment under the Financial Sector Assessment Program (FSAP) a mandatory part of surveillance under Article IV for 25 jurisdictions with Systemically Important Financial Sector (SIFS).
The 2010 decision aimed to achieve a more risk-based approach to financial sector surveillance and better integration of FSAPs into Article IV consultations in these jurisdictions.
The Review conducted in December 2013 introduced a new methodology to determine jurisdictions with SIFS that placed greater emphasis on interconnectedness and cross-border spillover channels.
The 2021 quintennial Review sought to make mandatory financial stability assessments even more risk-based, following directions from the concurrent Comprehensive Surveillance Review.

The 2013 methodology:
- Places greater emphasis on interconnectedness—especially the structure of interlinkages that channel cross-border spillover effects.
- Expands the range of covered exposures.
- Considers the potential for price contagion across financial sectors.
- Adheres to the principles of relevance, transparency, and even-handedness established by the 2010 Executive Board decision.
On May 12, 2021, the Executive Board concluded the quintennial Review of the FSAP, reexamined the methodology to identify SIFS, and endorsed that the 2013 methodology remained adequate with a couple of minor adjustments.

Outcomes of the methodological reviews and Executive Board decisions:
- 2010: Mandatory FSAPs for 25 jurisdictions with SIFS.
- 2013 Review outcome: list expanded to 29 jurisdictions (S29).
- 2021 Review outcome: list expanded to 47 jurisdictions.
Frequency of mandatory participation after the 2021 Review:
- 33 jurisdictions with relatively more systemically important financial sectors would participate in FSAP every once in five years.
- The other 15 jurisdictions—many of them are emerging market economies—would participate every once in ten years.
- The mandatory frequencies are minimums; assessments could be undertaken earlier if warranted.

The methodological focus on spillovers aligned with the Integrated Surveillance Decision adopted in July 2012, highlighting spillover importance in bilateral Article IV surveillance.
Some G20 members that committed to participate in FSAP following the Global Financial Crisis but were not part of S29 have participated voluntarily and regularly (examples cited: Indonesia, Saudi Arabia, and South Africa).